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Instead of a Form 1099, MLP investors receive a Schedule K-1 tax form. As a consequence of their pass-through status, holding MLPs in tax-exempt accounts may generate Unrelated Business Income Tax (UBIT). [2] To encourage tax-exempt investors, some MLPs set up C corporation holding companies of limited partner which can issue common equity. [3]
Here’s how a master limited partnership works, examples of MLPs and their pros and cons. Skip to main content. 24/7 Help. For premium support please call: 800-290-4726 more ways to reach us ...
ETNs use a different method to get around the K-1 problem, arguing that because they represent a debt obligation rather than a direct interest in an MLP, the income ETNs generate is interest ...
The Alerian MLP ETF , which is one gauge of the broader MLP industry, has a trailing-12-month dividend yield of 5.95% compared with the S&P 500 average of 2.16%.
A university runs a pizza parlor that sells pizza to students and non-students alike. The pizza parlor's workers are paid employees of the university. The university is a tax-exempt organization, and its pizza parlor generates unrelated business income. While the tuition and fees generated by the university are tax exempt, its income from the ...
The P/E ratio is out. Instead, we emphasize MLP-specific metrics like enterprise value to EBITDA (EV/EBITDA), distribution coverage ratio, and today's focus: price to distributable cash flow (P ...
Further, they all pay out around 50% of their predictable cash flow to investors in dividends (or distributions for the MLPs). The key difference between the two groups is their valuations.
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